Memorial Day weekend is one of several holidays the auto industry celebrates with sales and special marketing, but does that mean it’s actually a good time to shop for a new car?
For similar reasons as mattress companies, department stores and other businesses, automakers and car dealerships run Memorial Day promotions aimed at increasing sales around the long weekend.
It can be difficult to parse the difference between a marketing ploy and a genuine sale, but there are usually some interesting offers to consider around car buying holidays like Memorial Day and Christmas. And some Americans will be attracted to the idea of upgrading to a new car for the start of summer.
However, even if you’re able to find a deal before the end of the month, it’s still going to be an expensive time to buy a new car. The average new vehicle now costs $48,275, up from $46,531 a year ago.
According to Cox Automotive, the average interest rate for a new vehicle loan has soared above 9.5% following rate hikes from the Federal Reserve, which means that the typical monthly payment is extremely high: $766. At the same time last year, the typical monthly payment was $698.
2023 Memorial Day car sales
Memorial Day car promotions often take the form of special interest rates contingent on the buyer taking out a loan with the automakers’ financing arm. For example, this year, Memorial Day car shoppers in parts of the country can find 0% APR for 36 months offering for cars like the 2023 Mazda CX-9 and 2023 Nissan Rogue SUVs.
- Other low interest deals being promoted ahead of Memorial Day include a 0.9% APR for 36 months offer for the 2023 Honda Ridgeline truck and a 1.9% APR for 36 months offer for five Chevrolet models, including the Silverado.
- There are also longer loan term offers with higher rates, including a 3.99% APR for 48 months financing deal on the 2023 Toyota Camry sedan and a 2.99% APR for 60 months promotion for the 2023 Audi Q5 SUV. (Keep in mind that these deals are not available in all parts of the country or in every dealership.)
- As far as cash discount offers for Memorial Day, Cars.com picked its three favorite for 2023 models, which are the Jeep Compass ($1,500-$3,500), the Jeep Wrangler ($1,500-$2000) and the Hyundai Elantra ($750).
Are Memorial Day car deals worth it?
May is traditionally considered a good time to buy a car. But starting around the summer of 2021, the normal rules for finding deals on cars have been thrown out the window, due to a combination of higher demand, lower supply and rampant inflation. Since then, drivers have had little choice but to pay over the sticker price for new cars and select from a skimpy inventory of vehicles available at dealerships.
During pre-pandemic times, Memorial Day offers popped up as dealerships trying to juice sales at the end of the month, with especially good deals on any remaining cars from the previous model year. However, this year, shoppers are less likely to find old model year cars this late in the cycle because vehicle inventories are still low by historical standards due to production challenges.
- In general, with interest rates so high as Memorial Day approaches, the lowest APR special financing deals will require short loan terms, which means high monthly payments that many buyers can’t afford. The average loan duration for a new car is around 70 months, but many of the promotions mentioned above are only for 36-month loans.
- Edmunds reports that “car shoppers are being pushed to the extreme ends of the finance terms spectrum,” meaning that a larger share of buyers than ever before, 12.3%, are taking out 36- or 48-month loans to avoid interest, while most customers are taking out long loans to reduce monthly payments.
- It’s one example of how the new car market has become uninviting to shoppers who are not as well-off. Buyers with good credit can avoid egregious loan rates, which is a major advantage, and anyone who can make a large down payment or commit to a short finance term will save big over the life of the loan.
New car incentives are coming back, slowly
Manufacturers aren’t offering incentives at the same levels as before the pandemic. Yet with vehicle supply steadily rebounding, incentives are improving and reaching the highest point in a year in April at an average of $1,714, or 3.6% of the transaction price, according to Kelley Blue Book.
That could mean car shoppers will find better deals for Memorial Day than during previous sales events, like the December holidays. But 3.6% is meager compared to April 2019 incentives, which were 9% on average.
Consumer Reports put together a list of the best incentive deals that you can find on 2023 models, and it appears car buyers can get as much as 10% off the sticker price this Memorial Day with offers like cash rebates. Here are the top 10 offers:
- Chevrolet Equinox LT with 1LT AWD: 10%+ potential savings (MSRP: $29,300)
- Chevrolet Blazer 2LT AWD: 8%+ potential savings (MSRP: $37,800)
- Chevrolet Traverse Premier AWD: 7%+ potential savings (MSRP: $49,800)
- Dodge Charger R/T: 7%+ potential savings (MSRP: $42,940)
- Mazda CX-9 Touring AWD: 7%+ potential savings (MSRP: $38,750)
- Lincoln Corsair Reserve AWD: 7%+ potential savings (MSRP: $45,375)
- Ford Edge SEL AWD: 7%+ potential savings (MSRP: $39,345)
- Ram 1500 Big Horn Crew Cab 5’7″ Box 4WD: 6%+ potential savings (MSRP: $49,125)
- Cadillac XT5 Premium Luxury AWD: 6%+ potential savings (MSRP: $51,995)
- GMC Acadia Denali AWD : 6%+ potential savings (MSRP: $50,600)
More from Money:
7 Best Car Loan Rates of 2023
Here Are the Cars That Are Hardest to Find in Stock Right Now
Money’s Best Autos of 2023, From Sports Cars to SUVs